The bounce in risk sentiment was short-lived, and yesterday the Russian FX market returned to correction mode. Despite the uptick in the price of crude in the morning, USDRUB climbed to 59.00 at the opening and continued to move north for the rest of the session. In the evening, Brent lost momentum, first falling to the level of the previous close and then slipping to USD 53.31/bbl (-0.1%). As a result, RUB weakened 1.8% against USD, ending the session at 59.73. The EM FX universe also traded in the red, losing on average 0.5%. BRL and ZAR looked the weakest, dropping 1.2-1.3%, while KRW dived another 0.8% yesterday. In addition, NZD dropped 1.0%, while the other commodity-based currencies nudged down 0.1-0.2%.
Today, all eyes are on the CBR’s monetary policy meeting. We expect the CBR is to cut the key rate 50bp, thus adjusting the nominal rate for inflation deceleration and keeping the real key rate on hold (for more details, see our CBR Monetary Policy Preview – Cutting the key rate, keeping the real rate on hold). Given the relatively small size of the move, we do not expect any particular pressure on RUB, while we believe that its medium-term dynamics are to be shaped by oil and intensifying external debt redemptions.